Bitcoin (BTC) experienced significant price fluctuations, resulting in the liquidation of over $44 million worth of futures positions on Monday. The world’s largest cryptocurrency briefly surged to new monthly highs around $27,400 before retracing to the mid-$26,000s.
Volatility and Uncertainty
Bitcoin’s price exhibited volatility, with a $1,000 (over 4%) swing between session lows of approximately $26,400 and the aforementioned highs. The reasons for this price action remained unclear, with no specific news or fundamental catalysts driving the fluctuations.
While no specific cause could be pinpointed, some market unease may have been triggered by a filing from an auditor of Binance.US, expressing difficulty in verifying Binance’s collateralization of assets at times. This uncertainty potentially contributed to the pullback below the $27,000 mark.
Factors Influencing Price
Two key factors underpinned the price action:
- Expectations of an unchanged interest rate policy from the US Federal Reserve later in the week.
- Technical buying, as Bitcoin found support at its 21-day moving average (21DMA) and broke a downtrend that had been in effect since early August.
According to coinglass.com, of the $44 million in futures positions liquidated, approximately $32 million were short positions, marking the most substantial wipeout of Bitcoin bears since the previous week when BTC briefly dipped below $25,000.
Bitcoin’s Price Range and Outlook
Bitcoin’s price outlook improved as it broke free from its recent downtrend and found support at the 21DMA. It has seemingly established a new trading range between $25,000 and $28,000. To revisit yearly highs, BTC must breach key resistance in the $27,700-$28,500 range.
This week, macroeconomic factors, notably the Federal Reserve’s actions and communications, are expected to impact Bitcoin’s price. While an interest rate hold is anticipated, the central bank’s new economic forecasts and rate projections will be closely watched for clues about future rate hikes and cuts. Bitcoin tends to have a historically negative correlation with the US dollar and US yields.